Opinion
Case No. 2:15-cv-08362-ODW (JC)
02-11-2016
JESUS CASTANON, Plaintiff, v. INTERNATIONAL PAPER COMPANY; and DOES 1-100, Defendants.
ORDER DENYING MOTION TO REMAND [13]
I. INTRODUCTION
Plaintiff Jesus Castanon moves to remand this action to Ventura County Superior Court for lack of subject matter jurisdiction. (Motion to Remand ("Mot."), 1-2, ECF No. 13.) Castanon, a resident of California, argues that diversity of citizenship does not exist between the parties because Defendant International Paper Company's ("International Paper") principal place of business is in California. (Id. 3.) Furthermore, Castanon argues that International Paper failed to make a plausible allegation that the amount in controversy exceeds $75,000. (Id. 6.) For the reasons discussed below, the Court finds that diversity of citizenship exists and that the amount in controversy exceeds $75,000. Therefore, this Court DENIES Plaintiff's Motion to Remand.
II. FACTUAL BACKGROUND
This is a disability discrimination lawsuit arising out of Plaintiff Jesus Castanon's employment at Defendant International Paper Company's facility in Camarillo, California. Plaintiff's claims arise out of a workplace injury. In September 2010, Castanon injured his back while working at International Paper's facility in Camarillo, California. (Complaint ("Compl.") ¶ 7, Not. of Removal Ex. A, ECF No. 1-1.) Castanon then filed a workers' compensation claim with his employer. (Id.) International Paper disputed the workers' compensation claim, and Castanon subsequently appealed. (Id.) Castanon ultimately prevailed on appeal and International Paper closed Castanon's workers' compensation claim in September 2014. (Id.) Castanon then wished to return to work after the injury. Though Castanon's position at International Paper's facility required him to walk, bend, squat, push items, pull items, and lift approximately 50-70 pounds, two physicians cleared Castanon to return to work with certain restrictions: no lifting, pushing, or pulling of items heavier than ten pounds, and no bending, twisting, or actions that would place his spine in unusual or awkward positions. (Id. ¶ 8.) Castanon alleges that he requested reasonable accommodations under the physicians' restrictions before returning to work, but International Paper refused to accommodate him. (Id. ¶ 9.) Instead, International Paper allegedly offered Castanon to come back to work as an entry level journeyman mechanic, earning $10 less an hour than what he was making before his injury and related disability leave. (Id.)
On September 18, 2015, Castanon filed this action in Ventura County Superior Court, alleging four violations of the California Fair Employment and Housing Act ("FEHA"), Cal. Gov't Code § 12940 et seq.: (1) discrimination on the basis of disability; (2) failure to accommodate; (3) failure to take reasonable steps to prevent discrimination; and (4) retaliation. (Id. ¶¶ 17-37.) International Paper removed the action to this Court on October 26, 2015. (Not. of Removal, ECF No. 1.) On December 21, 2015, Castanon moved to remand. (ECF No. 13.)
III. LEGAL STANDARD
Federal courts have subject matter jurisdiction only as authorized by the Constitution and Congress. U.S. Const. art. III, § 2, cl. 1; see also Kokkonen v. Guardian Life Ins. Co. of Am., 511 U.S. 375, 377 (1994). A suit filed in state court may be removed to federal court only if the federal court would have had original jurisdiction over the suit. 28 U.S.C. § 1441(a). But courts strictly construe the removal statute against removal jurisdiction, and "[f]ederal jurisdiction must be rejected if there is any doubt as to the right of removal in the first instance." Gaus v. Miles, Inc., 980 F.2d 564, 566 (9th Cir. 1992). The party seeking removal bears the burden of establishing federal jurisdiction. Durham v. Lockheed Martin Corp., 445 F.3d 1247, 1252 (9th Cir. 2006) (citing Gaus, 980 F.2d at 566).
Federal courts have original jurisdiction where an action presents a federal question under 28 U.S.C. § 1331, or where each plaintiff's citizenship is diverse from each defendant's citizenship and the amount in controversy exceeds $75,000 under 28 U.S.C. § 1332.
IV. DISCUSSION
The parties dispute whether the amount in controversy and diversity of citizenship requirements have been satisfied. International Paper notes that Castanon seeks compensation for front pay, back pay, emotional distress, punitive damages, and attorneys' fees, and it contends that these damages, in the aggregate, satisfy the amount in controversy requirement. (Opposition to Remand ("Opp'n") 11, ECF No. 15.) International Paper also argues that all parties are diverse, and that federal court jurisdiction is therefore proper. (Id. 10.) This Court considers each element of diversity jurisdiction in turn.
A. Diversity of Citizenship
The Court finds the diversity of citizenship requirement satisfied, as Castanon is a citizen of California and International Paper is incorporated in New York, with a principal place of business in Tennessee.
A corporation is deemed to be a citizen of every state and foreign state by which it has been incorporated and of the state or foreign state where it has its principal place of business. 28 U.S.C. § 1332(c)(1). Here, it is undisputed that Castanon is a citizen of California. (Mot. 3.) Castanon, in turn, does not dispute that International Paper is incorporated in the state of New York. (Opp'n 3.) Therefore, whether or not the diversity of citizenship requirement is met rests on International Paper's principal place of business.
Castanon argues that International Paper's principal place of business is in California, rather than Tennessee. To support this proposition, Plaintiff cites Davis v. HSBC Bank Nevada, N.A., 557 F.3d 1026 (9th Cir. 2001), in which the Ninth Circuit determined that a defendant corporation was not considered a citizen of California for the purposes of satisfying 28 U.S.C. § 1332(c)(1). However, the Davis court reached its conclusion in part by using the "place of operations" test as an alternative to the "nerve center" test. 557 F.3d at 1028. Reliance on Davis and the "place of operations" test is misplaced. The United States Supreme Court has since rejected the "place of operations" test for determining a corporation's principal place of business; instead, courts must apply the standard "nerve center" test, which holds that a corporation's principal place of business is where "a corporation maintains its headquarters—provided that the headquarters is the actual center of direction, control, and coordination...not simply an office where the corporation holds its board meetings (for example, attended by directors and officers who have traveled there for the occasion)." Hertz Corp. v. Friend, 559 U.S. 77, 93 (2010). Since the Supreme Court's decision in Hertz, this Court has consistently applied the "nerve center" test in determining a corporation's principal place of business for purposes of satisfying 28 U.S.C. § 1332(c)(1). See Dejong v. Prod. Assocs., No. CV 14-02357 MMM (DTBx), 2015 U.S. Dist. LEXIS 35386, at *16 (C.D. Cal. Mar. 19, 2015); Sanderson v. Brooks, No. CV13-03497-ODW (SHx), 2013 U.S. Dist. LEXIS 93909, at *16-20 (C.D. Cal. July 3, 2013) (Wright II, J.); Health Facilities of Cal. Mut. Ins. Co. v. British Am. Ins. Grp., Ltd., No. CV 10-3736 PSG (JCGx), 2011 U.S. Dist. LEXIS 4272, at *4-6 (C.D. Cal. Jan. 11, 2011).
Here, International Paper has established that Tennessee is its principal place of business under the "nerve center" test. International Paper's corporate headquarters is located at 6400 Poplar Avenue in Memphis, Tennessee. (Adair Decl. ¶ 5, ECF No. 15-1.) International Paper's books and records are principally located in Memphis, Tennessee. (Id. ¶ 9.) Its senior executive team, including the Chief Executive Officer, Chief Financial Officer, Controller, General Counsel, Secretary, and Senior Vice President of Human Resources, all work out of International Paper's headquarters in Memphis, Tennessee. (Id. ¶ 10.) Nine out of eleven International Paper executive officers work at the company's headquarters in Tennessee; the other two operate abroad in Brazil and Brussels. (Id. ¶ 12.) The majority of International Paper's administrative departments, including the Human Resources Department, the Legal Department, the Finance Department, and the Information Technology Department, are all located in Tennessee. (Id. ¶ 14.) Finally, International Paper's Board of Directors regularly holds meetings in Memphis. (Id. ¶ 13.) Because International Paper has clearly established that Tennessee is its principal place of business under the applicable "nerve center" test, the jurisdictional requirement for diversity of citizenship is satisfied.
B. Amount in Controversy
Castanon's Complaint does not specify the exact amount of damages he seeks. When a plaintiff's state court complaint does not specify a particular damage amount, the defendant has the burden of establishing, by a preponderance of the evidence, that the amount in controversy exceeds the jurisdictional amount. Sanchez v. Monumental Life Ins. Co., 102 F.3d 398, 404 (9th Cir. 1996). Therefore, as the proponent of federal jurisdiction, International Paper bears the burden of showing that it is "more likely than not" that the amount in controversy exceeds $75,000. Id. at 398. Defendants can meet this burden by offering facts that support the contention that the amount in controversy exceeds the jurisdictional minimum, or producing evidence of jury verdicts for damages awarded in cases with analogous facts. Simmons v. PCR Tech., 209 F. Supp. 2d 1029, 1033-34 (N.D. Cal. 2002).
This Court finds that, when aggregating all of the damages Castanon seeks, the amount in controversy exceeds the jurisdictional minimum.
1. Lost Earnings
International Paper asserts that Castanon seeks back and front pay damages. (Mot. 11.) Castanon injured his back while working for the Defendant, in September of 2010. (Id. ¶ 7.) Castanon then left for medical leave in the same month. (Bates Decl. ¶ 15, ECF No. 15-2.) Before Castanon left for medical leave, he earned $24.30 per hour and worked 8 hours per day, 5 days per week. (Id. ¶ 7.) While he remained employed by International Paper, Castanon did not perform any work and did not receive any compensation after going on medical leave. (Id. ¶¶ 9-10.) Thus, by multiplying Castanon's daily wage prior to going on medical leave ($24.30 per hour, 8 hours per day) by the number of workdays from the time Castanon went on medical leave to the date this motion was scheduled to be heard on January 25, 2016 (345 workdays), International Paper contends that Castanon's back pay damages equal $67,068. (Opp'n 11-12.)
However, the amount in controversy must be determined as of the date of removal. Lighthouse Legal Fin. v. Doyle, No. CV 13-2625 UD (DUTYx), 2013 U.S. Dist. LEXIS 66540, at *2 n.1 (C.D. Cal. Apr. 29, 2013). Here, International Paper incorrectly based its estimated back pay amount on the workdays between September 2014 and the date of this motion's scheduled hearing, January 25, 2016. (Opp'n 11-12.) However, while the Court acknowledges that International Paper's back pay estimate is inflated, the Court nonetheless notes that, using the correct calculations, Castanon's back pay damages are substantial. After conducting an accurate calculation, this Court finds that, assuming Castanon was injured on September 1, 2014 and using the correct October 26, 2015 removal date instead of the January 2016 hearing date, Castanon could potentially receive back pay in the amount of $58,514.40.
Castanon does not allege an exact injury date in his Complaint. (See Compl. ¶ 7.)
In terms of front pay, International Paper contends that Castanon could recover up to $1,086,696. (Opp'n 12.) Moreover, International Paper asserts that an award of even one year of front pay (here, $50,544) would put the amount in controversy over the jurisdictional amount. (Id.) Plaintiff's Complaint, however, does not include a request for front pay. (See generally Compl.) While International Paper does cite cases where plaintiffs alleging wrongful termination under FEHA have received awards for future economic damages post-termination, it fails to point to any evidence in the record that Castanon will seek a similar jury award here. (See Opp'n 12.) As a result, International Paper's lost front pay argument is insufficient and the Court will not consider any hypothetical front pay award in the jurisdiction analysis. See Robinson v. Am. Airlines, Inc., No. CV 15-0287 FMO (MRWx), 2015 U.S. Dist. LEXIS 21443, at *7 (C.D. Cal. Feb. 20, 2015) (declining to include front pay in amount of controversy calculation where neither the plaintiff's Complaint requested it nor the defendant demonstrate that the jurisdictional amount should include it). Therefore, the Court will only consider lost back pay wages in the amount in controversy analysis.
2. Emotional Distress and Punitive Damages
International Paper next contends that emotional distress damages and punitive damages, when added to lost earnings, will meet the amount in controversy requirement. (Opp'n 14.) In determining the amount in controversy, the Court may include the request for punitive damages and emotional distress damages if a plaintiff may recover them under the applicable law. Gibson v. Chrysler Corp., 261 F.3d 927, 947 (9th Cir. 2001); Simmons, 209 F. Supp. 2d at 1033-34. California law allows for the recovery of punitive damages under FEHA, wrongful termination, and intentional infliction of emotional distress claims. Tameny v. Atl. Richfield Co., 27 Cal. 3d 167, 176 (1980); Simmons, 209 F. Supp. 2d at 1033.
International Paper cites several analogous California cases where plaintiffs have alleged discrimination under FEHA. (Opp'n 13-15.) The cited cases include awards based on a plaintiff's disability discrimination claim or some other form of discrimination in violation of FEHA, along with retaliation claims. All of the plaintiffs in these cases received large damage awards for emotional distress, each totaling over $75,000. (See id.) Each of the factually analogous cases proffered by International Paper also feature plaintiffs who received punitive damages awards of at least $20,000. (Id.) Since each cited case highlights punitive damage awards in excess of $20,000, it is plausible that Castanon could be awarded a similar amount for non-economic damages. Because Castanon could receive a punitive damages award that, standing alone, could meet the $75,000 jurisdictional minimum, it is also a realistic possibility that, combined with the potential $58,514.40 in back pay, Castanon's potential punitive damages could meet the amount in controversy requirement.
3. Attorneys' Fees
Castanon also seeks to recover attorneys' fees. (Compl. 7.) So long as the underlying statute authorizes a fee award for a successful litigant, attorneys' fees can be taken into consideration when determining the amount in controversy. Galt G/S v. JSS Scandinavia, 142 F.3d 1150, 1155 (9th Cir. 1998). Attorneys' fees are recoverable by the prevailing party in a FEHA action. Simmons, 209 F. Supp. 2d at 1034 (citing Cal. Gov't Code § 12965). As such, attorneys' fees are properly considered in the jurisdiction analysis. In Simmons, the court determined that the amount in controversy determination should account for reasonably foreseeable post-removal attorneys' fees. Id. at 1034-35. There, the court reasoned that "such [attorneys'] fees necessarily accrue until the action is resolved. Thus, the Ninth Circuit must have anticipated that district courts would [consider] the amount that can be reasonably be anticipated at the time of removal, not merely those already incurred." Id. Accordingly, this Court will consider post-removal attorneys' fees when determining the amount in controversy.
International Paper cites California jury verdicts in FEHA cases awarding attorneys' fees of $160,050, $114,584, and $818,000. (Opp'n 17.) International Paper also offers, in what it terms "the most conservative estimates [sic]," that Castanon's attorneys' fees would reach $30,000. (Id. 2-3, 17.) In reaching its estimate, International Paper cites Sasso v. Noble Utah Long Beach, LLC, No. CV 14-09154-AB (AJWx), 2015 U.S. Dist. LEXIS 25921 (C.D. Cal. Mar. 3, 2015), where the court, in considering a motion to remand FEHA claims, held that a reasonable rate for attorneys' fees in employment cases is $300 per hour. Id. at *12. The Sasso Court also held that "recent estimates for the number of hours expended through trial for employment cases in this district have ranged from 100 to 300 hours," and thus, "100 hours is an appropriate and conservative estimate." Id. Accordingly, the Sasso court held that attorneys' fees in that case were reasonably expected to equal at least $30,000. Id. Adopting the same conservative estimate in this case, the Court concludes that Castanon's demand for attorneys' fees under FEHA adds at least $30,000 to the amount in controversy. However, even without these fees, the potential damages available for back pay, emotional distress, and punitive damages exceeds the jurisdictional minimum and therefore federal jurisdiction is proper.
V. CONCLUSION
For the reasons discussed above, the Court finds that it has subject matter jurisdiction over this action under 28 U.S.C. § 1332. Accordingly, the Court DENIES Castanon's Motion to Remand.
IT IS SO ORDERED.
February 11, 2016
/s/ _________
OTIS D. WRIGHT, II
UNITED STATES DISTRICT JUDGE